The WACC of Tix Corp (TIXC) is 5.1%.
| Range | Selected | |
| Cost of equity | 35.20% - 758.30% | 396.75% |
| Tax rate | 2.20% - 16.80% | 9.50% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.9% - 5.3% | 5.1% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 7.55 | 143.91 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 35.20% | 758.30% |
| Tax rate | 2.20% | 16.80% |
| Debt/Equity ratio | 651.67 | 651.67 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.9% | 5.3% |
| Selected WACC | 5.1% | |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for TIXC:
cost_of_equity (396.75%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (7.55) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.